Haven't seen the latest from Petra but this was their updated view in April. Target price of $0.85 based on a gold price of US$1600 per oz.
Tietto Minerals Ltd (ASX:TIE) recently completed a A$130 million two-tranche placement that will fund the construction of the 3.35-million-ounce Abujar Gold Project in Côte d’Ivoire with no debt.
Abujar is now fully funded to first gold production, which is on track for the fourth quarter of 2022. Tietto plans to produce 260,000 ounces of gold in 2023.
Petra Capital sees significant re-rating potential as Tietto quickly enters the gold producer peer group.
The following is an extract from the research update:
West African gold developer and explorer TIE has successfully raised A$130m at A$0.50/sh. In addition, TIE has brought down the upfront capex through cost optimization work and the elimination of some contingencies. As a result, the Abujar Gold Project (AGP) in Côte d’Ivoire is now 100% equity funded to production. Abujar is fully permitted, with construction making good progress and US$41m spent on construction to end February.
TIE has a strong operational team in place to drive project delivery with first gold production on scheduled for December (260koz Au @ AISC of US$650/oz in the first 12 months). We see significant re-rating potential as TIE quickly enters the gold producer peer group.
BUY with a revised TP of A$0.85/sh (prev. A$0.98/sh) after adjusting for the new funding structure.
Funded to production with no debt
- Project funding de-risked, with new equity removing timing risk associated with the mandated US$130- US$140m Project Development Facility from Taurus. We note that COVID-19 travel restrictions prevented Taurus from undertaking onsite due diligence required for credit approval. We have removed US$140m in previously assumed debt from TIE’s balance sheet.
- TIE has recently revised down the capex estimate to US$196m from US$200m in Oct’21 DFS. Equally importantly, we believe that pre-production capital requirements have been reduced through construction cost optimization work, including the agreed deferral of certain costs (insurance, spares, etc) account for –US$35m of the capex estimate, giving TIE significant flexibility in payment timing.
- Finally, the Oct’21 DFS capex estimate includes US$24m in contingency costs. With high proportion of construction costs now contractually certain, we expect minimal contingency will be required, in any.
Target price A$0.85/sh (A$1.09/sh at spot gold)
- Our TP is predicted on a long–term (post 2024) gold price of US$1,600/oz. At constant spot prices of US$1,926/oz, our TP increases by 28% to A$1.09/sh.
- We see TIE, now in the pre-production stage, where WAF (A$1.3b m’cap today) was 2.5 years ago.
